Gold Silver Reports – Will FIIs Lap Up Indian Stocks this Sept too? — With the domestic equity benchmarks signing off August at their fresh 52-week highs, some investors remained worried as to whether and how long the ongoing rally will sustain. September is synonymous with the 2008 financial crisis in the US, which led to a tsunami of defaults in its banking system, rattling financial markets the world over.
If history is anything to go by, nothing, except for a combination of Fed rate hikes and FCNR redemptions, can halt the liquidity-driven rally in domestic equities. Consider this: September has seen heavy foreign inflows in 11 out of past 14 years. During this period, foreign institutional investors (FIIs) have pumped a combined `98,742 crore in do mestic equities. Last September, foreign portfolio investors were net sellers of stocks to the tune of `6,475 crore in the domestic market. But it was among the exceptions (2011 and 2008).
These institutional investors pumped `5,103 crore into domestic equities in 2014, `13,058 crore in 2013 and `19,261.30 crore in 2012. In September 2010, they infused a record `24,978.40 crore. On the other hand, there was outflow of foreign investor money to the tune of `158.50 crore in 2011 and `8,278.40 crore in 2008.
India has seen foreign inflows worth `40,462 crore to equities so far this year.
For experts such as Ridham Desai of Morgan Stanley , the Indian market is on the cusp of a liquidity super-cycle.
“Our forecast is that we will probably see $300-350 billion worth of inflows over the next 10 years. If you compare that number with what FIIs have brought in, this is sizeably larger.Therefore, we call it liquidity super cycle in India. So we are at the beginning of that cycle,“ Desai told ET Now.
Desai believes domestic markets will tend to trade above their historical averages. “Because there is demand unless there is a massive increase in supply , which I think may not happen immediately but may happen at some point in time, when the multiples get richer.“ — Neal Bhai Reports